In a recent report of the Economic Times, 220 million candidates were reported to be credit eligible in 2017 out of 1.3 billion Indians, which is only 60% of the entire population.  The rest 40% have supposedly poor credit score or no credit history that makes their loan application less preferable for financial institutions.

Candidates with poor credit score and history are considered as a potential threat from a lenders’ perspective, and hence they haven't approved the applications easily. However, it isn’t impossible for poor credit score bearers to avail a personal loan for emergency purpose. The approval of their credit application, however, depends on several factors, as explained below – 

1)Salary of a loan applicant
Since emergency loans are unsecured, lending institutions approve finances to customers who have decent credit score of 750 and above. But, in several cases when applicants with poor credit score approach a financial institution, they may find their loan application approved if their annual income is substantially high. This somewhat reassures lenders that you are capable of repaying money and hence they may approve loans.

Apart from high annual income, lenders also consider job stability and employer profile as important factors. An employer making delayed payments to its employees can raise questions against your loan application as well. Hence, a reputed employer, stable job, and high income can help an individual get a personal loan even with a poor credit score.

2)Availability of documents
Financial institutions offering personal loans for emergency verifies eligibility adherence of a candidate based on the documents provided. Individuals require to submit KYC documents, photographs, salary slips, and bank statements for the loan application procedure. These are a few documents generally required by lenders while offering personal loans. However, this requirement may vary from one financial institution to another.

3)Co-applicant’s eligibility
Many times, when lending corporations find it difficult to approve emergency finances to candidates, opting for a joint loan can help you get the required approval. Adding an eligible co-applicant to your personal loan application will solve the purpose and hence, increase the viability of your application. It is advised to add applicants that have comparatively decent credit score or high income.

In general, when poor credit score bearers seek a personal loan, they may find their application rejected or may be charged with high personal loan interest rates. Adding a valued co-applicant may help you out of this unwanted situation of paying higher rates of interest or low sanctioned loan amounts.

To help candidates with the loan procedure, non-banking financial companies like Bajaj Finserv provide pre-approved offers to candidates. These offers apply to several financial products that include personal loans, business loans, home loans and other financial products. Check your pre-approved offer by submitting required details like name and contact number.

Consequently, these are a few pointers that lenders look at before approving your personal loan application. It is possible for candidates with poor credit score to avail emergency loans for required situations, but they must keep these considerations in mind. Besides, applicants can make use of a loan calculator to compute the estimated monthly instalments for different values of tenor and rate of interest. Individuals who are well-informed and have the thorough knowledge about loans can make financially wise decisions. Besides, they will vitally be able to plan their upcoming financial goals better.

Subsequently, one should always try to improve their credit score to benefit the most from the finances and reduce the incurred cost of a loan. A credit score of 750 and above is considered creditworthy and will help you acquire better offers.